Wednesday, November 3, 2010

Obama's Luck Runs Out

Fishtailing is a good way to describe the American body politic these days. The Democrats only got in back in 1996, and here it is in 2010 and they are on the outs again, at least in the House of Representatives. Our grand Constitution ensures that clean sweeps are nearly impossible by having only one-third of Senators elected every 2 years, and of course Barack Obama has two more years guaranteed.

Unfortunately we can't toss out lobbyists every two years. The same lot of bloodsuckers is there in Washington (and in State capitals) no matter who is President or which party controls Congress.

Obama is beginning to remind me of Herbert Hoover, and certainly reminds me of the ancient Greek adage that you don't know whether a man has had a lucky or unlucky life until he is buried. Herbert Hoover was a great guy and swept the nation in his Presidential bid in 1928. He had served less than a year in office when the stock market crashed. The Democrats won the House of Representatives in 1930 after roughly the first year of the Great Depression, except that no one knew in 1930 that anything was much wrong beyond a rather sharp drop off in the business cycle. Everyone thought the economy would start back up in 1931.

By the time Franklin Delano Roosevelt took office in 1933, blame for the Great Depression had firmly stuck to Hoover and the Republican Party. As far as I can tell, nothing they did caused the Depression and nothing they could have done could have prevented it. Even though the economy did not get much better under Roosevelt during his first term in office, most people failed to shift blame from Hoover to Roosevelt. World War II ended the Great Depression, not Roosevelt or the New Deal. I like some of the provisions of the New Deal, and some were helpful to people at the time, but it is false to give it credit for ending the depression.

Obama's timing, like Hoovers, was just bad. By the time Obama was elected in late 2008 the economy was falling apart. George W. Bush was not to blame; he did not create the housing bubble. Keep in mind that most American's don't follow politics or economics closely. It takes time for reality to sink in. Reality was real clear for all but the most obtuse by mid-2009, but by then Obama was President. Also, he made big promises to get elected, and some fools believed him.

Federal money that could have been used to create temporary jobs for people had to be used for banking and auto-industry bailouts. Those bailouts probably did save us from a depression-style crash, but the average voter doesn't worry about what might of happened. They know what happened: if they did not lose their job, people they know did. And almost everyone had their hours of work cut back in 2009, and so felt poorer. Small businesses in particular were driven to the wall.

Another difference between Roosevelt and the 1934 Democratic Party and Obama and the 2010 Democratic Party is that there was no safety net to speak of in 1932. So between '32 and '34, people were just happy to be fed and sheltered. The safety nets were in place in 2008, so people wanted more. They wanted their jobs back.

The Republican Party has no solutions available. They want to cut the Federal budget, but they won't cut where the fat is: defense and homeland security spending. Cutting the federal budget means cutting jobs. Their idea of creating jobs is giving rich people tax breaks; job creation does not work that way, and tax breaks for anyone will just add to the federal deficit. The Tea Party and Republican ideology advocates do-nothing government. That may be a fine thing in some ways, but it does not create jobs.

But it probably does not matter. We are in an upswing of a business cycle, helped by robust demand from better-managed nations like China, India, and Brazil (all socialist, more or less). I doubt the Republicans in Congress will be able to do anything that would help or hurt the economy in a major way. But that won't keep them from taking credit for the improving economy. Of course, with Obama in the White House, he'll be working hard to take credit for the improving economy too. So maybe his luck will change again.